Digest – Can Europe avoid a major crisis in 2011?

The risk of the EU plunging into a major crisis in 2011 is a reality. The financial pressures brought about by the Greek crisis, and the difficulties encountered by the European-led coalition in Libya, show that the European Union is still fragile and is finding it difficult to convince the world and the financial markets.

Nevertheless, the crisis management capacity of the EU is being strengthened. Its enlargement remains on the agenda, as Brussels has just recently confirmed the 2013-2014 accession for Croatia, and is speeding up the process for Serbia's integration, after Ratko Mladic's arrest in May.

The issues in detail:

- The Greek financial crisis – the foremost challenge for the EU – will cloud the European perspective throughout 2011. For the time being, the EU has managed to remain united over its financial assistance to Greece, as confirmed by the European Summit of 23-24 June. A second assistance package will be confirmed, most probably in early July, as the Greek parliament is expected to approve the needed reforms on 28 June.

Points to follow: 1) the EU capacity to convince private creditors to join the rescue scheme as imposed by Germany; 2) the Greek authorities’ capacity to implement the reforms, especially in terms of tax collection, to put public finance back on track.

- The Libya intervention, led by NATO, is more of a challenge for the EU military capacity than it is a risk of suffering defeat. For the moment, after three months of operations, the Gaddafi regime is being cornered, and undoubtedly, Colonel Gaddafi will not be in a position to regain control of the entire country. Therefore, politically, Gaddafi has been weakened and has to find a political exit. Nevertheless, the main lesson from the operation ‘unified protector’ is that the EU defence capabilities are now too fragile to sustain a long military intervention abroad. Europe’s dependence on the US is still very much obvious. The European defence budget has to stop being reduced, which is a difficult challenge in a time of financial crisis.

- Europe’s enlargement remains on the table. Politically, this is good news, as it shows that there is still a need for more ‘Europe’ in Western Balkans. Definitely, the arrest of Ratko Mladic has reopened Serbia's gateway to integration. On 24 June, the European Council also confirmed Croatia's accession in 2013-2014. The question is whether the EU can oblige the Balkan states to implement enough reforms to avoid facing the same difficulties which Bulgaria and Romania are confronted with. One can foresee that Serbia’s path to integration and the integration of contiguous countries will be tougher.

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